S.Korea Exports Expected to Continue Growth, Inflation Projected to Reach BOK Target: Reuters Poll

By Jihoon Lee

SEOUL – South Korea’s exports are anticipated to have increased for the 11th consecutive month in August, according to a Reuters poll released on Thursday. Economists pointed to a growing demand from China as a key driver.

The survey also indicated that consumer inflation is likely to decline to the central bank’s medium-term target of 2%, marking the first time in nearly three and a half years that this benchmark has been reached.

Forecasts suggest that exports from the world’s fourth-largest economy will rise by 13.0% compared to the same month last year, based on the median estimate of 16 economists surveyed between August 23 and 28. This projection is slightly lower than the 13.9% increase recorded in July, which was the strongest growth since January. Economists noted that underlying demand for South Korean products remains strong, aided by base effects.

As the first major exporting nation to release monthly trade figures, South Korea provides early insights into global demand trends. Export growth has been consistent since October 2022, primarily driven by semiconductors and U.S. shipments associated with artificial intelligence.

“Sales of IT products, including semiconductors and computer components, are maintaining rapid growth, with a rebound in car sales also expected,” stated Stephen Lee, an economist at Meritz Securities.

In the first 20 days of August, exports surged by 18.5%, with semiconductor shipments rising by 42.5% and automobile exports increasing by 7.9%. Regionally, exports to the United States saw an 18.0% increase, while shipments to China grew by 16.3%.

“Most notably, the rebound in shipments bound for China is anticipated to significantly contribute to export growth in August,” remarked Park Sang-hyun, an economist at iM Securities.

The poll also projected a 6.3% year-on-year increase in imports, a slowdown from the previous month’s rise of 10.5%, which was the fastest growth since September 2022.

South Korea’s trade balance is expected to post a surplus for the 15th consecutive month, with the median estimate set at $4.67 billion, up from $3.60 billion in July.

Additionally, the survey indicated that annual inflation in South Korea likely eased to 2.0% in August, down from 2.6% in July, marking the lowest rate since March 2021.

The country is set to release its trade figures for August on Sunday, September 1, at 9 a.m. local time, followed by inflation data on September 3.